Taxation and Government Income/Expenses
It is the perennial problem of Governments – how to pay for public goods and services. The short answer is through taxation – but the real question is how to raise taxes without stifling wealth creation. There is the story of Window tax, first introduced in Britain in 1696, where your tax rate increased with the number of windows in the house – which led to homeowners blocking up windows to avoid paying the tax!
The purpose of this paper is to examine which tax regime leads on to prosperity. In the UK today, and most western economies, the majority of taxes bear heavily on employment – is this causing high levels of unemployment and consequently growing poverty, as well as inequality?
In contrast, Hong Kong has very low levels of taxes on income. Our analysis shows that at least some of the Economic Rent arising in Hong Kong is collected by the government through taxes on property, and other levies. So we will look in some detail at the tax regime in Hong Kong, some of its unique revenue raising techniques, and the resulting health of its economy. What does this tax regime achieve which other tax regimes fail to achieve? If Heineken devised tax regimes, is this what they would look like?
